Monday, June 26, 2017

Indian Inequality

Does it matter whether some individual rising above the $1.90 poverty line achieves a new income level of $2.15 or of $5.50? 

Government statistics show that the share of the population below the national poverty line fell from 45 per cent in 1993 to 37 per cent in 2004 and further to 22 per cent by 2011. Since the country’s economy was growing fast during this period, it seemed easy to connect the two things and claim that it was national economic growth that had caused the observed rapid reduction in poverty. India’s poverty line at the time of writing is still among some of the lowest in the world, set at a level lower even than the one applied by some of the least-developed countries. The claim, however, about rapid poverty reduction has been advanced on the basis of this penurious definition. If one were to work, instead, with the median developing country poverty line of $3.10/day—a more appropriate standard, given India’s present circumstances—the extent of poverty reduction is decidedly smaller. Between 1993 and 2009, a period of rapid national growth, the share of the population below the $3.10 poverty line fell by less than half as much as the share below the low national poverty level. The total number of $3.10-poor people increased over the same period. Among all countries, India has the largest number of $3.10-poor people. Nearly 60 per cent of the country’s population, and more than 70 per cent of rural India, were poor by this definition in 2015.

For many who depend upon agriculture, the vicissitudes of the seasons add another source of risk and fluctuation. No particular month’s income (or expenditure) provides an accurate reflection of such a family’s usual circumstances. If calculations of monthly expenditures are made right after the harvest, then one gets one set of poverty numbers, but if these calculations are made, instead, in the months of the monsoon, the hardest time of the year, when money and food supplies are both running low and there are many diseases, then a much larger number of households will be found in poverty. India, together with other developing countries, has a large number of people who experience wide fluctuations in their economic circumstances. Many among them cycle in and out of poverty, never quite escaping its clutches. The numbers of these people are not separately counted by official agencies, and because their existence is not recognized, no particular assistance has been provided. Smaller-scale studies have helped cover this important gap in poverty knowledge. Undertaken in different parts of India, these studies show that between 55 and 88 per cent of all households had experienced poverty for the entire year or for shorter periods. These numbers are much larger than the official poverty estimate, and in many ways, they more accurately reflect the everyday lives of poorer people.

Between one-third and one-half of all poor people were not born to poverty, the results show; these people have become poor within their lifetimes.  Focus on the aggregate number, upon quantity rather than quality, has led to two kinds of tunnel vision. Officials assess poverty in terms of the share of the poor in the total population. But neither do they pay heed to how many people actually escaped poverty or how many fell into poverty nor are they usually concerned with how high above the poverty line different individuals have ascended. Official statistics do not help distinguish between the number of poverty escapes that were of a marginal kind (a rise from $1.90 to $2.15) and how many others moved far beyond the zone of poverty (say, to the $5.50 level). In the official count, every escape from poverty is totted up as a success, even those that are marginal and temporary.

To end inequality, contact:
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